Sunday, November 27, 2016

There is a lot of spin that Trump's election will be a good thing for coal. For instance, he has nominated the coal-industry backed anti-science stooge Myron Ebell to head the EPA and dismantle regulations and programs that protect the environment, which is what the EPA is supposed to be all about. However, the facts seem to indicate even this won't save the coal industry.

Coal's problem with Trump is that he's a businessman and coal simply doesn't make good business sense. In fact, the only possible way any power company can afford to use coal is to receive massive government subsidies and pass the cost of operations on to others. Besides the actual cost of coal (subsidized by the taxpayer), other costs include the cost of acid rain, particulate pollution, mercury emissions, coal sludge and greenhouse gas emissions. More and more, the coal industry is being forced to pay its way and it is becoming economically unfeasible as a power source. 'Cheap' coal is a myth and market forces are demonstrating this. Nothing Ebell or Trump can do will change that.

As an example, steps to reduce the amount of mercury emitted by coal-burning power plants has resulted in 19% lower levels of mercury poisoning in Atlantic fish. This reduction has occurred more quickly than expected and was the result of EPA regulations. The evidence this is true is the fact that fish from the Pacific Ocean, a region polluted by Asia power plants, have not experienced the same improvement. Ebell will have a hard time allowing power plants to ramp-up mercury emissions. Even if they try, the courts will have something to say about it.

And then there was this interesting piece of news - the largest ever shale oil deposit has been discovered in Texas, containing at least 20 billion, and possibly 100 billion, barrels of oil recoverable with today's technology. Why is that bad for coal? Because, along with the oil is 16 trillion cubic feet of natural gas, possibly even as much as 160 trillion cubic feet. How much is that? The US consumed about 27 trillion cubic feet of natural gas in 2015. This one discovery stands to supply at least six months of the entire country's natural gas needs all by itself. Cheap, plentiful natural gas has been a real problem for coal. Burning natural gas is much cleaner than burning coal, thus, much cheaper. Discovering large deposits of more cheap, easily recovered gas isn't good for coal. Nothing Ebell or Trump does will change that.

Even worse for coal is the fact that renewable energies are becoming cheaper than coal. Critics say this is because of subsidies. This isn't true, but even if it was, don't forget all of those subsidies coal gets. Again, nothing Trump of Ebell will be able to do will change this fact of the business environment.

The outgoing head of the EPA, Gina McCarthy, recently stated "there is no bigger threat to American progress and prosperity" than climate change. Again, there is nothing Ebell and Trump can do to change this. Even if they try to deny it with their anti-science logic, the courts have some authority to protect the American people. And, don't count out Congress completely. The Republicans may control both chambers, but many Republicans are admitting manmade climate change is real and the hold that party has is weak. The pro-science group may still carry the day.

These are the economic and business facts. Ebell and Trump can't change them, although I'm sure they will both try their best. In any event, the days of decline for the coal industry will continue while the boom in the renewable industry will continue. The market place demands it.